Japanese blue-chip stocks with high foreign market exposures
The yen has weakened substantially, focusing on Japanese MNCs. The yen has depreciated by over 10% against the US dollar since the end of Feb and is down almost 20% YoY.
Focus on MNCs and exporters – The weaker yen helps make Japanese exports more competitive overseas and increases profits when they are converted from dollars to yen. Japanese blue-chip stocks with substantial overseas exposures include Sony (6758), Nintendo (7974), and Toyota (7203). While there may be concerns that global demand for consumer goods may contract due to high energy prices, we expect profitability and stock prices in yen terms of these market leaders to remain firm given the weak yen.
Nintendo (7974) develops and manufactures video game hardware and software. Among the Big Three the videogame console makers, Nintendo's Wii is no. 1, battling with Microsoft's (MSFT) Xbox and Sony's PlayStation for the hearts and dollars of devoted gamers. Japan accounts for 24% of Nintendo’s revenues.
Sony (6758) is a Japanese conglomerate best known for its Playstation video game console and network. Sony also makes a variety of electronic equipment, mobile phones, and image sensors. It also develops, produces, distributes and licenses recorded music, motion pictures, television programming and operates television and digital networks. Japan accounts for 33% of Sony’s revenues.
Toyota (7203) is one of the world’s largest carmakers. North America, Asia (ex-Japan), and Europe account for 35%, 18%, and 10% of revenues respectively. Japan accounts for 25% of Toyota’s revenues.